Reduction of Title II Benefits Under the Family Maximum Provisions in Cases of Dual Entitlement

SOCIAL SECURITY ADMINISTRATION

20 CFR Part 404

RIN 0960-AE85

Reduction of Title II Benefits Under the Family Maximum

Provisions in Cases of Dual Entitlement

AGENCY: Social Security Administration.

ACTION: Interim final rules with a request for comments.

-----------------------------------------------------------------------

SUMMARY: We are amending our rules concerning the family maximum

provisions under title II of the Social Security Act (the Act). These

rules amend how we compute the total monthly benefits payable to a

family when one or more of the beneficiaries are entitled to benefits

on another earnings record. In certain specific circumstances, this

change to our rules will increase the amount of benefits payable to

some family members entitled on the record to which the family maximum

applies. These final rules adopt nationwide the holding of the U.S.

Court of Appeals for the First Circuit in Parisi by Cooney v. Chater.

Although we are issuing these rules as interim final rules, we are also

asking for public comments on this change.

DATES: These regulations are effective October 27, 1999. To be sure

your comments are considered, we must receive them by December 27,

1999.

ADDRESSES: Comments should be submitted in writing to the Commissioner

of Social Security, P.O. Box 17703, Baltimore, MD 21235-7703, sent by

telefax to (410) 966-2830, sent by E-mail to ``[email protected],''

or delivered to the Office of Process and Innovation Management, Social

Security Administration, L2109 West Low Rise Building, 6401 Security

Boulevard, Baltimore, MD 21235-6401, between 8:00 A.M. and 4:30 P.M. on

regular business days. Comments may be inspected during these hours by

making arrangements with the contact person shown below.

FOR FURTHER INFORMATION CONTACT: Regarding this Federal Register

document-Bill E. Hilton, Social Insurance Specialist, Office of Program

Benefits, Social Security Administration, 6401 Security Boulevard,

Baltimore, MD 21235-6401, (410) 965-2468 or TTY (410) 966-5609;

regarding eligibility or filing for benefits--our national toll-free

number, 1-800-772-1213 or TTY 1-800-325-0778.

SUPPLEMENTARY INFORMATION:

Background

Section 203(a) of the Act establishes a limit, derived from a

worker's primary insurance amount (PIA), on the total monthly benefits

to which dependents or survivors may be entitled on the basis of one

worker's earnings record (the family maximum). Under our previous

regulations, the benefits of each claimant entitled on the worker's

earnings record were reduced proportionally so that the total monthly

benefits of those entitled on the record in one month did not exceed

the family maximum. In calculating total monthly benefits, we included

all benefits of the claimants who were entitled on the worker's record

without considering whether the benefits were actually due or payable.

Our previous regulations were challenged in court by the child of a

worker who was disabled. The worker and his dependent child, the

plaintiff in this case, began receiving Social Security benefits on the

worker's earnings record. The worker's spouse became entitled to

retirement benefits (old-age benefits) based on her own earnings

record. Under section 202(r) of the Act, she was deemed also to have

applied for and become entitled to wife's benefits based on the

worker's earnings record. The Social Security Administration (SSA)

determined that because the monthly retirement benefits that she was

entitled to receive on her own exceeded the amount of her monthly

wife's benefits on the worker's earnings record, she could only receive

payment for the retirement benefits payable on her own earnings record.

However, SSA counted the benefits to which she was entitled on the

worker's earnings record, but which were not actually paid to her,

toward the monthly maximum amount of benefits payable on the worker's

earnings record (the family maximum). Because the total monthly amount

of the worker's disability benefits, the plaintiff's child's benefits,

and the wife's benefits exceeded the monthly family maximum limit, SSA

reduced the amount of the plaintiff's and the wife's monthly benefits.

In Parisi By Cooney v. Chater, 69 F.3d 614 (1st Cir., 1995), the

court held that, when computing a reduction under the family maximum

pursuant to section 203(a) of the Act, SSA should not include the

monthly benefit that would otherwise be payable to a spouse if payment

of that spouse's benefit is precluded (by section 202(k)(3)(A) of the

Act), due to the spouse's dual entitlement to a higher benefit on the

spouse's own earnings record. To

[[Page 57775]]

implement the Court's ruling in the First Circuit, we issued an

Acquiescence Ruling (AR) on January 13, 1997 (62 FR 1792). Under this

ruling (AR 97-1(1)), which applied only to claims for benefits in the

First Circuit, SSA considers only the amount of monthly dependent's or

survivor's benefits actually due or payable to the dually-entitled

person when determining the amount of the benefit reduction because of

the family maximum. As a result of the Court's decision, we reassessed

our interpretation in our prior regulations and consistent with our

rules on acquiescence which were designed to restore national

uniformity to our programs, we have decided to adopt the court's

holdings nationwide.

Explanation of Changes

We are amending Sec. 404.403 of our regulations by adding a new

paragraph (a)(5). This new paragraph specifies that, in cases involving

benefits subject to reduction for both the family maximum and dual

entitlement, we consider only the amount of monthly dependent's or

survivor's benefits actually due or payable to the dually-entitled

person when we determine how much to reduce total monthly benefits

because of the family maximum. We have included examples of how we

compute benefits payable in such cases.

These changes are effective for benefits payable for months

beginning October 1999.

In conjunction with the revisions we are making to adopt the

holdings of the Parisi court nationwide, we are publishing elsewhere in

today's Federal Register a notice rescinding AR 97-1(1).

Clarity of These Regulations

Executive Order (E.O.) 12866 and the President's memorandum of June

1, 1998, require each agency to write all rules in plain language. In

addition to your substantive comments on these rules, we invite your

comments on how to make these rules easier to understand.

For example:

Have we organized the material to suit your needs?

Are the requirements in the rules clearly stated?

Do the rules contain technical language or jargon that is

unclear.

Would a different format (grouping and order of sections,

use of headings, paragraphing) make the rules easier to understand?

Would more (but shorter) sections be better?

Could we improve clarity by adding tables, lists, or

diagrams?

What else could we do to make the rules easier to

understand?

Electronic Version

The electronic file of this document is available on the date of

publication in the Federal Register on the Internet site for the

Government Printing Office http://www.access.gpo.gov/su__docs/aces/

aces140.html. It is also available on the Internet site for SSA (i.e.,

SSA Online): http://www.ssa.gov/.

Regulatory Procedures

Pursuant to section 702(a)(5) of the Social Security Act, 42 U.S.C.

902(a)(5), as amended by section 102 of Public Law 103-296, SSA follows

the Administrative Procedure Act (APA) rulemaking procedures specified

in 5 U.S.C. 553 in the development of its regulations. The APA provides

exceptions to its notice and public comment procedures when an agency

finds there is good cause for dispensing with such procedures on the

basis that they are impracticable, unnecessary, or contrary to the

public interest. We have determined that, under 5 U.S.C. 553(b)(B),

good cause exists for dispensing with the notice and public comment

procedures in this case. We have determined that prior public notice

and comment in this instance would be contrary to the public interest

since any delay in issuing these rules as final rules would

unnecessarily deprive the small number of affected beneficiaries of

increased benefits. Therefore, we are issuing these regulations as

interim final rules. However, even though we are issuing these rules as

interim final regulations, we are requesting public comments and will

issue revised rules if necessary.

For the same reasons, we also find good cause for dispensing with

the 30-day delay in the effective date of a substantive rule, provided

for by 5 U.S.C. 553(d).

Executive Order 12866

We have consulted with the Office of Management and Budget (OMB)

and determined that these interim final rules do not meet the criteria

for a significant regulatory action under Executive Order 12866. Thus,

they were not subject to OMB review. We have also determined that these

rules meet the plain language requirement of Executive Order 12866 and

the President's memorandum of June 1, 1998. However, as noted earlier,

we invite your comments on how to make the rules easier to understand.

Regulatory Flexibility Act

We certify that these interim final regulations will not have a

significant economic impact on a substantial number of small entities.

Therefore, a regulatory flexibility analysis as provided in the

Regulatory Flexibility Act, as amended, is not required.

Paperwork Reduction Act

These interim final regulations will impose no additional reporting

or recordkeeping requirements requiring OMB clearance.

(Catalog of Federal Domestic Assistance Program Nos. 96.001, Social

Security-Disability Insurance; 96.002, Social Security-Retirement

Insurance; 96.004, Social Security-Survivors Insurance)

List of Subjects in 20 CFR Part 404

Administrative practice and procedure, Blind, Disability benefits,

Old-Age, Survivors and Disability Insurance, Reporting and

recordkeeping requirements, Social Security.

Dated: October 20, 1999.

Kenneth S. Apfel,

Commissioner of Social Security.

For the reasons set forth in the preamble, we are amending subpart

E of part 404 of Title 20 of the Code of Federal Regulations as

follows:

PART 404--FEDERAL OLD-AGE, SURVIVORS AND DISABILITY INSURANCE

(1950- )

Subpart E--[Amended]

1. The authority citation for subpart E of part 404 continues to

read as follows:

Authority: Secs. 202, 203, 204(a) and (e), 205(a) and (c),

222(b), 223(e), 224, 225, and 702(a)(5) of the Social Security Act

(42 U.S.C. 402, 403, 404(a) and (e), 405(a) and (c), 422(b), 423(e),

424a, 425, and 902(a)(5)).

2. We are amending Sec. 404.403 by adding a new paragraph (a)(5) to

read as follows:

Sec. 404.403 Reduction where total monthly benefits exceed maximum

family benefits payable.

(a) * * *

(5) When a person entitled on a worker's earnings record is also

entitled to benefits on another earnings record, we consider only the

amount of benefits actually due or payable on the worker's record to

the dually-entitled person when determining how much to reduce total

monthly benefits payable on the worker's earnings record because of the

maximum. We do not include, in total benefits payable, any amount not

paid because of that person's entitlement on another earnings record

(see Sec. 404.407). The effect of this provision is to permit payment

of up to the full maximum benefits to other beneficiaries who are not

subject to a deduction or reduction.

[[Page 57776]]

(See Sec. 404.402 for other situations where we apply deductions or

reductions before reducing total benefits for the maximum.)

Example 1: A wage earner, his wife and child are entitled to

benefits. The wage earner's primary insurance amount is $600.00. His

maximum is $900.00. Due to the maximum limit, the monthly benefits

for the wife and child must be reduced to $150.00 each. Their

original benefit rates are $300.00 each.

Maximum--$900.00

Subtract primary insurance amount--$600.00

Amount available for wife and child--$300.00

Divide by 2--$150.00 each for wife and child

The wife is also entitled to benefits on her own record of

$120.00 monthly. This reduces her wife's benefit to $30.00. The

following table illustrates this calculation.

Wife's benefit, reduced for maximum--$150.00

Subtract reduction due to dual entitlement--$120.00

Wife's benefit--$30.00

In computing the total benefits payable on the record, we disregard

the $120.00 we cannot pay the wife. This allows us to increase the

amount payable to the child to $270.00. The table below shows the steps

in our calculation.

Amount available under maximum--$300.00

Subtract amount due wife after reduction due to entitlement to her

own benefit--$30.00

Child's benefit--$270.00

Example 2: A wage earner, his wife and 2 children are entitled

to benefits. The wage earner's primary insurance amount is

$1,250.00. His maximum is $2,180.00. Due to the maximum limit, the

monthly benefits for the wife and children must be reduced to

$310.00 each. Their original rates (50 percent of the worker's

benefit) are $625.00 each. The following shows the calculation.

Maximum--$2,180.00

Subtract primary insurance amount--$1,250.00

Amount available for wife and children--$930.00

Divide by 3--$310 each for wife and children

The children are also entitled to benefits on their own records.

Child one is entitled to $390.00 monthly and child two is entitled

to $280.00 monthly. This causes a reduction in the benefit to child

one to 0.00 and the benefit to child two to $30.00. Again, the

following illustrates the calculation.

Benefit payable to child 1 reduced for maximum--$310.00

Subtract reduction due to dual entitlement--$390.00

Benefit payable to child 1--$0.00

Benefit payable to child 2, reduced for maximum--$310.00

Subtract reduction for dual entitlement--$280.00

Benefit payable to child 2--$30.00

In computing the total benefits payable on the record, we

consider only the benefits actually paid to the children, or $30.

This allows payment of an additional amount to the wife, increasing

her benefit to $625.00. This is how the calculation works.

Amount available under maximum for wife and children--$930.00

Subtract amount due children after reduction due to entitlement to

their own benefits--$30.00

Amount available for wife--$900.00

Amount payable to wife (original benefit)--$625.00

Example 3: A wage earner, his wife and 4 children are entitled

to benefits. The wage earner's primary insurance amount is

$1,250.00. His maximum is $2,180.00. Due to the maximum limit, the

monthly benefits for the wife and children must be reduced to

$186.00 each. Their original rates are $625.00 each. This is how the

calculation works.

Maximum--$2,180.00

Subtract primary insurance amount--$1,250.00

Amount available for wife and children--$930.00

Divide by 5--$186.00 each for wife and four children

Two children are also entitled to benefits on their own records.

Child one is entitled to $390.00 monthly and child two is entitled

to $280.00 monthly. This causes a reduction in the benefit to child

one to $0.00 and the benefit to child two to $0.00. This calculation

is as follows.

Benefit to child 1, reduced for maximum--$186.00

Subtract reduction due to dual entitlement--$390.00

Benefit payable to child 1--$0.00

Benefit to child 2, reduced for maximum--$186.00

Subtract reduction for dual entitlement--$280.00

Benefit payable to child two--$0.00

In computing the total benefits payable on the record, we

disregard the $372.00 we cannot pay the children. This allows

payment of an additional amount to the wife, and the two remaining

children as follows:

Amount available under maximum for wife and children--$930.00

Subtract amount due child one and child two after reduction due to

entitlement to their own benefits--$0.00

Amount available for wife and the other two children--$930.00

Amount payable to the wife and each of the remaining two children--

$310.00

* * * * *

[FR Doc. 99-28017 Filed 10-26-99; 8:45 am]

BILLING CODE 4191-02-P